HOW ARE INDUSTRIAL SECTOR OPTIMIZATION, MITIGATION POLICIES AND TAXES CONTRIBUTING TO CARBON NEUTRALITY? THRESHOLD EVIDENCE FROM EUROPE

There is a growing interest in the significance of product and process innovations in the battle against global emissions. However, from an innovation standpoint, mitigating strategies concentrated on patents, not the role played by trademarks. As a result, we compare the effectiveness of trademarks and patents in Europe in terms of mitigating the effects of patents. Their complementary role is tested using the interaction between the patent and the trademark (INV). Similarly, the study examines the threshold effect of carbon pricing (CTAX) and environmental policies (EPLY) for a period spanning from 2001 to 2019. The outcomes reveal that product and process innovation are driving towards carbon neutrality. The evidences further suggest that if innovation is above threshold (INV> 10.5) point, 1% increase in it can lower the emission by 2.09%. Moreover, further strengthening the environmental policies and 1% increase in taxes can neutralize emission by 6.9% and 2.93%, respectively. It is further observed that trade openness, energy consumption, economic growth and urbanization have detrimental effect on the environment. The study concludes that taxes can be used as a short run tool however, innovations in different sectors and stringent environmental policy can guide the economies towards sustainable economic growth while protecting the environment.